Tag Archives: credit card
Can You Ask Your Credit Card To Lower Your Interest Rate?
If you think that the interest rate of your credit card must be reduced, dont just sit there and wait. Credit card companies wont volunteer to lower your rate if you wont ask them to. Surprisingly, a recent study reveals that 57% of credit card holders simply phoned in their requests and were granted a lower rate without any difficulty. So if you think youre a good candidate, pick up your phone and speak out.
Why Ask for a Lower Rate Lowering your interest by even just 10 points or less can bring huge savings to your budget. Just imagine bringing down your 19% interest to just 10%. Now certainly, that makes a big difference. Although it should be your goal to pay off your balances in full each month and avoid the interest altogether, there may be instances when you have to carry over your balance. Reducing your interest rate protects you from the risk of bad credit.
Are You a Good Candidate? Nevertheless, credit card companies wont just lower their rates for anyone. Are you a good candidate? First, check your credit report and gauge your credit rating. If youve been consistent in submitting your payments on time to all your creditors, you should have problem maintaining a high credit score. Paying off your monthly charges in full also makes you an ideal customer for creditors.
Your debt to income ratio may also be considered. How much do you spend each month and how does this compare to your earnings? Do you frequently carry a large amount of charges on your card? Do you often maximize your cards credit limit? Financial experts recommend not using more than 40% of your given credit. Using more than 505 or worse, exceeding your credit line would make you a high-risk borrower in the eyes of creditors.
Also, you need to consider the type of credit card you have. If youre using a secured credit card or a bad credit credit card, you may not be in the position to demand for reduced rates. Since youre regarded as a high-risk borrower, you cant expect your credit card company to reduce your rates just because you asked them to.
What to Say If you enjoy an excellent credit history, theres no reason why you shouldnt deserve a lower rate. The question is, what should you say to your credit card issuer? What points can you use to convince your credit card to reduce your costs?
One strategy is to research about the interest rates that other credit card companies offer. Based on your research, compare them with your credit cards rate and use this argument to request for a lower rate. You can also point out that youve been a long time customer (and a good payer at that!) and that youll like to stay within their company but that other credit cards seem to offer a better deal. Ask them if they could match that offer.
If the person you talked to insists that it is not in their power to make adjustments on fees, ask to speak with the supervisor. If your request is initially rejected, dont lose hope. Call again after a month or two and see if theyll be more agreeable to your request. While waiting, continue to improve your credit score and youll have better chances of getting a positive answer.
Credit Card Debt Management Consolidations
Credit card debt consolidation can be of two types consolidating all your debts into one debt, or taking a fresh loan to pay off all the existing debts. Technically the latter type is called debt consolidation loan but the term debt consolidation is often used to mean both methods. One should confirm before committing to either alternative and choose whatever method is more suitable to his/her situation.
Mere debt consolidation is not a loan. It is the process wherein you combine all your credit card debts into a single debt with the help of a professional debt management/repayment program of a financial institution. The representative of the program negotiates on your behalf with the credit card companies regarding your outstanding debts. The duty of the representative is to secure a lower rate of interest and reduction in penalties for late payments.
Instead of paying several separate bills every month you make only one consolidated monthly payment of a fixed amount to the debt manager as if there is only one loan. It is his duty to make the payments to the individual creditors and keep your accounts up to date. The programs will require you to stop using your cards till complete repayment of debts. With the systematic guidance of a professional debt management program you can pay off all your debts in a much shorter time than you expect. The service involves fees for securing all these benefits.
The second type of debt consolidation entails taking a fresh loan to pay off the existing loans. It is the oft resorted measure to pay off the credit card debts. A debt consolidation loan facilitates a fixed rate of interest, lower monthly installments and the convenience of servicing a single loan – instead of coordinating between many debts with different rates of interest. Credit card consolidation service providers or help centers extend the necessary assistance to get the loan.
One should be careful before going for a consolidation loan because more often than not they charge a high rate of interest and generally they are secured loans – unlike credit card debts, which are unsecured debts. A default may result in losing the property given as collateral. Choose only a loan with a competitive rate of interest.
Debt consolidation of either type does not revamp your credit rating overnight. But it can help improve your credit history and ensure a debt free future with careful planning. Also, it protects you from harassment of creditors and the humiliation of filing for bankruptcy.